Macfarlane refuses to speed up car inquiry

Ian Macfarlane believes over-subsidising the industry will inevitably lead to its failure. Photo: Bohdan Warchomij

Mark Skulley

Federal Treasurer Joe Hockey has warned the car industry that the Abbott government will not negotiate industry assistance with a “gun to its head” over possible plant closures.

The government has ordered the Productivity Commission to report on the car industry and Mr Hockey said the Coalition was “not going to have knee-jerk reactions to individual businesses who are driving their own timetable.”

”We want to work with the car industry on a sustainable and affordable plan for the future,” he told journalists in Melbourne. “But we do not negotiate with a gun to our heads.”

The government has told the Productivity Commission to produce an interim report by Christmas and a final report by the end of March 2014.

On Wednesday, Industry Minister Ian Macfarlane met Toyota Australia executives Max Yasuda and David Buttner in Japan for a tour of the company’s Tsutsumi plant, which makes the Camry model.

Before leaving Australia, Mr Macfarlane told the ABC that he would not be able to reveal the long-term policy until about mid-2014 when the government responded to the final PC report.

“Well, I made it clear to Holden right from the start that we’re not in a position to given them an answer before Christmas. They may not accept that readily but that the reality.”

“This is the process and it has to take time. We can't just throw out a heap of money and hope we can fix it because that will inevitably lead to the failure of the car industry.”

Mr Macfarlane struck a more conciliatory note than Mr Hockey, saying that “every other country in the world subsidises its car manufacturers, in most cases far more extensively than ­Australia.”

Ford will stop making cars locally by October 2016. GM Holden and Toyota are seeking to lock in policy and assistance before making big investment decisions over the next year.

Opposition industry spokesman Senator Kim Carr said Holden’s US owner, General Motors, discussed the Australian operations three weeks ago and the mood was “bleak”.

“This is a government that is now playing chicken with the automotive companies,” he said. “They are using this report as a ruse to get them past the South Australian election.”

The terms of reference for the Productivity Commission include inquiring into whether existing assistance should be “re-targeted” and on ‘alternative assistance mechanisms.”